Public Bill Committee

[Mr. Joe Benton in the Chair]
E48 - C2E (Committed to Equality)
E49 - Equity Partnership
E50 - Scottish Womens Aid
E51 - Elaine Smith MSP
E52 - Equality and Diversity Forum (additional memorandum)
E53 - Paul Thomas

Clause 38

Contract Workers

John Penrose: I beg to move amendment 213, in clause 38, page 28, line 2, after worker, insert
with a protected characteristic compared to a contract worker without a protected characteristic.

Joe Benton: With this it will be convenient to discuss amendment 214, in clause 38, page 28, line 10, after worker, insert
with a protected characteristic compared to a contract worker without a protected characteristic.

John Penrose: It is a pleasure to see you in the Chair, Mr. Benton, as we prepare to consider these measures. The amendments are multi-technical and seek clarification. During the evidence sessions at the start of our deliberations, there was some discussion with representatives of the insurance industry about contract workers. I want to clarify whether the Government are clear about the comparator for the clause and to know whether, when talking about discrimination against contractors, we are talking about discrimination against contracted workers without a protected characteristic or non-contract workers, such as regular employees, as the relevant comparator. I hope that the comparator that the Minister puts on the record is straightforward.
The evidence session a couple of weeks ago sounded a few warning bells in my mind, and it is important that we clarify matters. Without trying your patience too much, Mr. Benton, I want to highlight the fact that all members of the Committee are aware that separate measures that are before the House will impact on contract and agency workers, and I want to ensure that the Bill is not a stealthy way to achieve something that is supposed to be in those measures and that it will do what it is intended to do, rather than something broader. I hope that the Minister can put our minds at rest.

Vera Baird: Good morning to you, Mr. Benton, and to all members of the Committee. The provision is not an attempt to do anything stealthy of the type that has been mooted, although my response will be a tiny bit more complicated than my just saying no.
The clause makes it unlawful for the principal, the person who makes work available to contract workers, to discriminate, harass or victimise a worker. Amendment 213 would change the effect of the law by limiting the comparison by which discrimination was established to another contract worker. That would be the comparator.
However, clause 22 already establishes the fact that, as under the current law, the comparator must be someone whose circumstances are not materially different from those of the complainant. That is likely to be another contract worker, but it is not impossible that a claimant could seek to compare their treatment with that according to a permanent member of staff employed by the principal if there were, as clause 22 requires, no material difference between the circumstances in the case. It would be a question of fact about whether there was any material difference.

John Penrose: To clarify the Ministers point, it is important to understand what the similarities and the legitimate differences might be. I hope to hear reassurance that the legitimate differences might be that contract workers would be different because of the terms of their contract and the fact that they are not permanent employees and have different terms and conditions as a legal basis for their engagement with the principal. However, if the task that they are performing is, under the terms of the contract, the same as that of a full-time employee, that would be a fair comparison. In other words, we are not trying to eliminate the differences between contract workers and full-time workers, those being different forms of employmentboth of which have a legitimate purpose and value in the workplace, and which we would not want to fudge or try to elide.

Vera Baird: The hon. Gentleman is absolutely right. The issue is protected strands and discrimination. Issues elsewhere relate to different contractual terms, which are often different between contract workers and employees, and there is no sneaking elision of the two.
May I speak to amendment 214 before I specifically say what the hon. Gentleman wants me to say? Amendment 214 would introduce a comparator to victimisation where no comparator is necessary at all, and it would turn current law on its head. I know that it is only a probing amendment, but I need to say that we could not possibly accept it, because it would have that peculiar effect.
On 8 May, the Department for Business, Enterprise and Regulatory Reform issued a consultation document on the proposed approaches to the European agency workers directive, which requires that agency workers be treated equally with permanent staff in the organisation in which they are placed after a qualifying period determined by member states, along with social partners. According to the directive, the qualifying period is to be 12 weeks. In our view, the document does not contain any policy risks in relation to the Bill.
The proposal is that protection be granted to agency workers as for a permanent staff member. It is to be decided whether a hypothetical comparison will be permitted as a comparator, but the entitlement will be to equal treatment with that comparator in terms of conditions of work. That is the directive, not the Bill. However, there might be issues from an employers point of view. The protection is distinct from that provided in the Bill, which is concerned with presenting less favourable treatment because of protected characteristics rather than because of the nature or conditions of the work. They are two completely separate policy streams. I hope that satisfies the Committee.

John Penrose: I thank the Minister for that explanation. That is indeed the point I was driving at and she has explained that the two strands are entirely separateone does not affect the other. It is important for businesses around the country to have that on the record, so I thank her for it. With that assurance, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 38 ordered to stand part of the Bill.

Clauses39 to 49 ordered to stand part of the Bill.

Schedule 6

Office-holders: excluded offices

Lynne Featherstone: I beg to move amendment 199, in schedule 6, page 170, line 9, at end insert
or other authorities of the GLA family.

An amendment to clarify that elected members of GLA authorities (MPA, LFEPA etc.) are to be treated in the same way as members of the GLA.
This really follows on from the clause 2 amendment where we attempted to include the Greater London authority in the socio-economic duty. There seems to be a similar anomaly, so I am trying to get the Minister to clarify whether elected members of the GLA authorities, which include the Metropolitan Police Authority and the London Fire and Emergency Planning Authority, will be treated in the same way as the members of the GLA itself.

Vera Baird: Paragraph 2 of the schedule excludes political offices from the protectionavailable under clauses 46 to 48against discrimination, harassment and victimisation. The provision ensures that essentially political matters, such as appointment to council offices or indeed to ministerial offices, do not come before a tribunal. There is a carefully drawn exclusion of specific offices in specific political settings, which include GLA offices held by the Mayor and members of the assembly. That is obviously a good thing.
The connection between election and offices in places such as the MPA is not so clear. Protection for people holding offices in such bodies will be available in any case only if the office satisfies the definition of a personal or public office for the purposes of clauses 46 to 48, or if it fits under any other provision in part 5, but it will not arise as a result of election.
The amendment would cause confusion between members of the authorities mentioned in it, some of whom are elected, although many are not. We think it would complicate the provision. In essence, the provision protects people who are elected, as opposed to those who get to their office in some different way, and it would be unlawfully regressive if the amendment were accepted.
The hon. Lady has made her point; she has probed the issue. I hope that she now appreciates the complexity of the matter and I invite her to withdraw the amendment.

Lynne Featherstone: I have listened carefully to the Minister. To clarify, is she saying that if someone is elected to the GLA and then appointed to the MPA, which is what happens to elected members on the GLA, they will not be protected?

Vera Baird: If it was a personal or public office, or if they were in employment, but otherwise not.

Lynne Featherstone: Okay. On that basis, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Schedule 6 agreed to.

Clause 50 ordered to stand part of the Bill.

Clause 51

Interpretation

Vera Baird: I beg to move amendment 62, in clause 51, page 40, line 14, after second a, insert relevant.

This amendment and amendment 63 would correct a minor drafting error to clarify that the interpretation of a reference to conferring a relevant qualification applies in relation to all relevant qualifications. A reference to conferring a relevant qualification would then include a reference to renewing or extending its conferment.

Joe Benton: With this it will be convenient to discuss Government amendments 63, 75, 76 and 77.

Vera Baird: The amendment inserts the word relevant before qualification, thereby making the wording more specific. I do not know whether there is any need to debate that.

Amendment 62 agreed to.

Amendment made: 63, in clause 51, page 40, line 15, after a, insert relevant. (The Solicitor-General.)

See the explanatory statement for amendment 62.

Clause 51, as amended, ordered to stand part of the Bill.

Clause 52

Employment service-providers

Vera Baird: I beg to move amendment 226, in clause 52, page 41, line 12, leave out from service-provider to end of line 14 and insert
, except in relation to the provision of a vocational service..

This amendment and amendments 227 to 229 would maintain the effect of the existing law by providing for persons who provide certain employment services to be subject to the anticipatory duty to make reasonable adjustments that is imposed by Part 3 in relation to services generally.

Joe Benton: With this it will be convenient to discuss Government amendments 227, 64, 228 and 229.

Vera Baird: I call this the back to the future provision, which will restore the position as it was. Amendments 226, 227, 228 and 229 restore the position under the Disability Discrimination Act 1995 when it comes to reasonable adjustment placed on those providing employment services and vocational services. The amendment maintains the existing protection by obliging an anticipatory duty. Disabled people wanting to avail themselves of high street employment agencies or Jobcentre Plus need to be able to access the services on offer and receive information and advice in ways that are accessible to them.
Members who in an earlier debate were keen to test the effectiveness of the reasonable adjustment provisions will be reassured that there is no erosion of existing levels in that connection. The amendment also restates the position for enforcement of the duty to make reasonable adjustments in respect of vocational services as being via the employment tribunal. I suspect that that will also meet with peoples approval because it is usually thought of as being easier than the county court.
Amendment 64 concerns clause 53, which defines what the provision of an employment service does and does not include for the purposes of clause 52, which makes it unlawful to discriminate, harass or victimise someone when using such a service. We want to omit clause 52(3), which excludes from that clause employment services provided other than by way of a trade or profession. We want to do that because it is necessary to ensure that employment services provided by volunteers are also captured by the discrimination provisions.
All together, the exceptions ensure that the Bill is consistent with the position under current law, whereby in what capacity an employment service is provided is irrelevantthe appropriate duties are still on the provider.

Amendment agreed to.

Amendment made: 227, in clause 52, page 41, line 14, at end insert
( ) The duty imposed by section 27(7)(a) applies to a person concerned with the provision of a vocational service; but a failure to comply with that duty in relation to the provision of a vocational service is a contravention of this Part for the purposes of Part 9 (enforcement).. (The Solicitor-General.)

See explanatory statement for amendment 226.

Clause 52, as amended, ordered to stand part of the Bill.

Clause 53

Interpretation

Amendments made: 64, in clause 53, page 41, line 37, leave out subsection (3).

This amendment would omit Clause 53(3) which excludes from the scope of Clause 52 services the provision of which is otherwise than by way of a trade or profession, reinstating the effect of existing law, whereby the manner in which employment services are provided is irrelevant.
228, in clause 53, page 42, line 4, leave out subsection (7).

See explanatory statement for amendment 226.
229, in clause 53, page 42, line 12, at end insert
( ) A reference to the provision of a vocational service is a reference to the provision of an employment service within subsection (2)(a) to (d) (or an employment service within subsection (2)(f) or (g) in so far as it is also an employment service within subsection (2)(a) to (d)); and for that purpose
(a) the references to an employment service within subsection (2)(a) do not include a reference to vocational training within the meaning given by subsection (8)(b), and
(b) the references to an employment service within subsection (2)(d) also include a reference to a service for assisting persons to retain employment.. (The Solicitor-General.)

See explanatory statement for amendment 226.

Clause 53, as amended, ordered to stand part of the Bill.

Clauses 54 and 55 ordered to stand part of the Bill.

Clause 56

Interpretation

Lynne Featherstone: I beg to move amendment 244, in clause 56, page 43, line 38, at end insert
(ca) a member of an authority in the GLA family;.

An amendment to ensure all GLA authorities cannot discriminate against its members, such as the LFEPA or MPA.

Joe Benton: With this it will be convenient to discuss the following: amendment 245, in clause 56, page 44, line 6, at end insert
(m) a fire authority..

An amendment to ensure members of fire authorities are protected from discrimination.

Lynne Featherstone: We are back to the GLA. The amendment is probing and based on an earlier amendment. Amendment 245 probes the same issue to ensure that members of fire authorities across the country are protected against discrimination. It would be helpful if the Minister clarified where the members of other public authorities, such as police authorities and fire authorities, stand in terms of the clause.

Vera Baird: Let me explain the protectionI thank the hon. Lady for the amendments to facilitate that. Amendment 244 is to include authorities in the GLA family within the meaning of local authority for the purposes of protection under clause 55. The amendment would even include the members of those authorities in the definition of a local authority, so they would be prohibited from discriminating against themselvesbut never mind, I appreciate that the amendment is probing.
Members of those bodies may be protected under clauses 46 to 48, in respect of the appointment and conditions of office if they are personal or public office holders, or under clause 36 if the relationship amounts to employment. However, clause 55 aims at elected members while they undertake official business. It harmonises the existing law, providing a limited exception to the exclusion of elected offices from protection under discrimination law, recognising the importance of prohibiting discrimination and enabling reasonable adjustments in the carrying out of official business by local authority members.
We have put a power in clause 56(3) whereby bodies that exercise functions conferred on local authorities may be added to the list, recognising the fact that many members of local authorities are subsequently appointed to other, quasi-local authority bodies to discharge some of the functions of the local authority. Ensuring that such members are protected from discrimination, victimisation and harassment in the carrying out of official business in respect of those bodies as well is right, because they operate effectively as an extension of the local authorities, the functions of which they are discharging. It is better to do that by secondary legislation, rather than in the Bill, for greater flexibility, given that local authorities change and the situation is dynamic. We shall consider what bodies should be included by means of the power, and we shall look at the ones referred to by the hon. Lady at that time.

Lynne Featherstone: I thank the Minister for that clarification. Having the provision put so clearly into words is helpful. On that basis, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 56 ordered to stand part of the Bill.

Clause 57 ordered to stand part of the Bill.

Clause 58

Communications

Amendments made: 65, in clause 58, page 45, line 19, leave out from person to scheme in line 20 and insert
who is a pension credit member of an occupational pension scheme as they apply in relation to a disabled person who is a deferred member or pensioner member of the.

A non-discrimination rule does not apply in relation to pension credit members of an occupational pension scheme. This amendment and amendments 66 and 89 would ensure that disabled pension credit members are protected from discrimination in so far as communications in relation to the scheme are concerned.
Amendment 66, in clause 58, page 45, line 26, leave out subsection (2).(The Solicitor-General.)

See explanatory statement for amendment 65.

Clause 58, as amended, ordered to stand part of the Bill.

Clause 59

Relevant types of work

Question proposed, That the clause stand part of the Bill.

Joe Benton: With this it will be convenient to discuss the following: amendment 260, in clause 61, page 47, line 16, at end add
(5) Where section [Relevant types of work (No. 2)] (2) applies, the provisions of this section will apply to the extent that a term of As is less favourable than a corresponding term of B would be, or that A does not have a term which B would have..
Amendment 261, in clause 62, page 48, line 27, at end add
(11) Where section [Relevant types of work (No. 2)] (2) applies, the provisions of this section will apply to the extent that a term of As is less favourable than a corresponding term of B would be, or if a discretion in relation to A is capable of being exercised in a way which is less favourable than it would be in relation to B..
New clause 24Relevant types of work (No. 2)
(1) Sections 61 to 65 apply where
(a) a person (A) is employed on work that is equal to the work that a colleague of the opposite sex (B) does;
(b) a person (A) holding a personal or public office does work that is equal to the work that colleague (B) of the opposite sex does.
(2) To the extent set out in sections 61 to 64, those sections also apply where A does not have a colleague B who does work that falls within subsection (1), because there is no such person of the opposite sex to A..

Lynne Featherstone: This debate is about hypothetical comparators. The amendments would allow people to make a claim for equal pay when there is no real comparator. The argument is quite well-troddenif one Googles hypothetical comparator on the parliamentary website, one can see that the discussion goes back through many forms of Committees over many years. This time round, I hope that we will make a change.
Traditionally, women who suffer unequal pay are at a significant disadvantage to other forms of discrimination, such as race and disability. It is the only type of discrimination regarding pay differentials where there is a particular requirement to propose a real comparatorto point to someone else to compare with, in the work that one is undertaking. That has proventhe TUC, the Fawcett Society and the Womens National Commission agreeto be a significant obstacle where such a comparator does not exist. That happens when there is a majority female work force.
Professions dominated by females are often underpaidcleaners, hairdressers, dinner ladies and many other female occupations. They often have a lower ratio of pay. Because there are virtually no men doing comparable jobs in comparable places, it becomes impossible to argue that the work is undervalued, because we cannot point to a real comparator.
For reasons of history and female economic inequality through almost every strata, womens work is always given a lower price tag, even when men are doing equivalent tasks that require equivalent skills to those of a female-orientated job. The requirement is not imposed on other types of discrimination. For example, if someone is trying to prove race discrimination, they are not barred from claiming discrimination if they cannot find a real comparator. It is a discrimination within discriminations.
The Womens National Commission, in its evidence, said that it is very much in favour of hypothetical comparators, and would like to see, as we would on the Liberal Democrat BenchesI suspect on many other Benches as wellthe barrier removed from equal pay claims. The Fawcett Society said that that would make a huge difference. Will the Minister explain why there has been resistance to removing that barrier to equal pay, which has set women back so profoundly? I do not understand the rationale behind it, so I would welcome her response.

Sandra Osborne: I would like to echo the comments of the hon. Lady. Getting equal pay has been a long-term problem. Many women are disadvantaged, especially those who are low paid and whose work is undervalued in our society. I also support the views of the TUC and the National Womens Commission in relation to the matter. I would like an explanation from the Minister as to why the provision cannot be brought in to complete the Bill. I am sure that she has a good explanation, which I am looking forward to hearing.

Vera Baird: I know that there are a number of views on the matter. The Fawcett Society and the NWC are in favour of hypothetical comparators, as the hon. Member for Hornsey and Wood Green said. I will turn specifically to that. If anybody finds it helpful, I could set out the whole scheme of the chapter, but I think she put her finger on the point that she is really interested in, as did my hon. Friend the Member for Ayr, Carrick and Cumnock.
I hope that it would be helpful if I set out some examples that are usually given to support the need for hypothetical comparison in equal pay cases. The first kind of example is about gender segregation, which the hon. Member for Hornsey and Wood Green has already mentioned. The example is that in some work environments, as a result of gender segregation, no men are doing equivalent work to women. The suggestion is that if the women believed that they were underpaid, they should be able to claim on the basis that, were there a man doing that work, he would be paid more. The amendment would allow that.
One difficulty with that is what the evidence would be that a man in that situation would be paid more. If there is clear evidence, such as a statement by the employer to that effect, a claim would be a possiblewe have made it so in clause 66as that would be direct discrimination. There may not be many cases of that, but those that exist will be caught by the Bill. Any remaining gap would be in cases where the employer discriminates indirectly against a woman in relation to contractual pay.
The amendments demonstrate the difficulty of doing that. As I understand them, the amendments would permit a claimant to argue that B, a hypothetical employee doing the same or similar work, has a term in their contract that the claimant does not, or one that is better than the equivalent one that the claimant has. It is quite difficult to see on what basis a tribunal could reasonably reach that conclusion. If it were asked to do so by relying on evidence that people doing completely different work had such a term, such a claim would not succeed. In effect, we would be asking the tribunal to decide that the fact that there is a difference in pay between two people of the opposite sex doing completely different work somehow supports the argument that two such people doing the same work would also be paid differently. That is a significant thing to ask a tribunal to do, and considerable uncertainty would emerge.
I may be asked what the difference is between that and a case of indirect sex discrimination. In an indirect discrimination case advanced on that basis, an employer would say that the difference in pay reflects a difference in work. That would, in our view, be sufficient to establish that there was a materially different set of circumstances under clause 22, which is the clause I spoke of earlier when we dealt with contract workers, and hence, the claim would fail.
A similar point can be made in respect of other examples commonly given. For example, a woman being paid only 50 per cent. of the salary given to a man, when she works at 75 per cent. of the value, should be able to claim. Other examples commonly given arise from situations where work has been privatised. They are difficult examples to agree with, because they call for a comparison between the terms of people who are employed by different employers. That is not how the Bill works, and cannot be right. Direct discrimination in pay can, and should, in our view be properly examined through the equality clause provisions in the Bill.
An alternative approach would have been to scrap the contractual approach, but Members will know that we have retained the contractual approach and the distinction between contractual and non-contractual pay matters for work-related gender discrimination. While we could have done the oppositescrap the contractual approachor allow discrimination claims in parallel with it, in our view, all the difficult issues that arise in equal pay cases would arise with the discrimination approach too, only that they would be in a different order.
Mr. Benton, I wonder if it is possible for me to leave the room for a brief duration. I apologise that it is at so inconvenient a time.

Sitting suspended.

On resuming

Vera Baird: I thank all members of the Committee for their indulgence and for allowing me to take a most important telephone call about the steelworks in my constituency, which I could not put off until the end of our sitting. I want to explain, not least to the public, what has been going on. I am most grateful to you, Mr. Benton, and to colleagues.
I was saying that we could have taken an alternative approach, scrapping the contractual approach and allowing discrimination claims in parallel with it. They were the two options. However, all the difficult issues that arise in equal pay matters would come from that approach, too, even though they would come in a different order. It is clear that, if we made a wholesale change, the potential would exist for issues that have already been settled by the courts to be revisited. It is also likely that, more often or not, after expensive litigation the result would be the same.
There would always be the possibility, too, of new difficulties arising such as a claim advanced on the basis of a statistical analysis of the pay given to groups of workers doing different work, differently valued, perhaps showing that paying one group more disadvantages women who make up a smaller proportion of that group. Perhaps I should repeat that. A claim advanced on the basis of a statistical analysis of the pay given to groups of workers doing very different workdifferently valuedcould show that paying more to one group more disadvantages women who make up a smaller proportion of that group. One could see such a situation arising. Is that on its own to be the basis for a claim?
Surely the right response to that is not artificially to increase the pay of one group, but to seek to ensure by other means that women are as well represented in the higher paid group as in the lower. There might be risks of such cases arising. It would not be right to take the substantial risk that a large number of new cases, which would ultimately fail, would arise in such a way.
Doubtless we will have this argument again in various guises throughout consideration of the Bill, but that is a key point to raise at this stage. Changing to a different model could lead to uncertainty with more litigation and unpredictable outcomes for employers and employees alike. We are not convinced that any real advantages for women would be achieved by that change to offset the disadvantages. Right now there is a need for stability.
What the hon. Members for Hornsey and Wood Green and for Oxford, West and Abingdon propose goes beyond the protection offered by indirect discrimination, and I suggest it goes a very long way. What the issues expose is in part related to the question of where the boundary lies between individual disadvantage, which can be corrected by the Bill, and the disadvantages that arise in society, which should be dealt with by policies aimed at closing the pay gap rather than individual remedy.

John Mason: I appreciate the point that the Solicitor-General makes, but if the Bill is not the place to address such issues, where is? There are some much wider issues out there disadvantaging women in particular, but also other groups. My own experience in a local authority showed that comparisons could be made within the authority, because everyone was employed by the same employer, but outside there are separate organisations that employ only specific groups of workers, and they are disadvantaged because they cannot be compared with anyone else. Is the Bill not the place to deal with that?

Vera Baird: No. The issue is about equal pay between workers in the same employ. It is not about trying to ensure that employer A pays the same rate as employer B, which is something for trade union negotiations or policies connected more broadly with trying to redress the disadvantage of women who are likely to be paid less but who are not in a group that can be protected under the provision.

Diane Abbott: My hon. and learned Friend says that the issue is about ensuring that groups of employees doing comparative work for the same employer are paid the same, but she forgets the electorate. For them, the Bill is designed to address inequality of pay across the board between men and women, and they look to the Bill as a mechanism to achieve that. Over a long period, many groups have raised issue in the amendment that colleagues have tabled to achieve it. For the public, this is about not particular employers, but the salaries that women, on average, can expect to obtain for comparable work done by men, on average.

Vera Baird: But this is not the clause in which the public will look for that. If they did, they would be misguided. There are many other matters in the Bill that we will debate presently, which are about trying to get equal pay through transparency. There are requirements on the private and public sectors.

Lynne Featherstone: Will the Solicitor-General give way?

Vera Baird: I will finish my point first and sketch out the issues so that the hon. Lady can join in our debate about them.
The proposal, which is accepted by the CBI and the TUC, is that the commission will set up a group of the representatives of employers and employees that will work out the right things to measuremetrics, as they are now calledto achieve disclosure of pay gaps firm by firm, industry by industry. That is a better way to drive forward the broader agenda for equal pay than this particular provision, which is essentially about protecting an individual against an overpaid individual doing comparably equal work. When we come to those provisions, my hon. Friend the Member for Hackney, North and Stoke Newington will see, if I have not explained them clearly enough, that they are designed to get rid of the pay gap that exists in the public sector but more powerfully in the private sector.
In what we hope is a short period, we shall use the transparency demands to make businesses see that if they disclose unequal pay, they are not likely to achieve investment. Smart women will go where there is not unequal pay and consumers who buy ethically will not buy their goods. There are other provisions that directly seek to attack the whole question of systemic unequal pay.
We shall come to a debate about representative actions, too, albeit they are not in the Bill. However, they are under consideration. That, again, can have broader reach into the whole area of systemic inequality in employment not only for gendergender in particular, as that is what we are talking aboutbut for other protected characteristics.
Additionally, in due course we intend to put out a document, side by side with the Bill, looking at all the other sources of unequal pay and inequality between men and women. The Women and Work Commission has been reconvened to look at its earlier recommendationswhether it sticks with those recommendations, whether it has further recommendations, whether the Government have done enough to meet the original demandsand, with our document, we ought to be able to draw things together for ourselves. There will be consultation, so that everyone can put in any strategy to get rid of unequal pay. Aspects such as poor training and the low quality of available part-time work cannot be reached by legislation. The broader issues of equal pay come under some of those headings, rather than being dealt with effectively here. There is plenty yet to come, and everything does not hinge on the clause. My hon. Friend is right, but this is not where public expectation should lie.

Lynne Featherstone: I appreciate the amount of work that the Government are doing to deal with such problemswe are all moving in the same direction. However, this particular case has been something of an issue for women going to tribunal when in women-only professions. In a sense, the ability to use a hypothetical comparator will give them insurance against whatever may happen with the Equality and Human Rights Commission matrix and all the other things. A number of organisations have supported the idea. For example, the Equality and Diversity Forum says that the directive does not permit the exclusion of provisions outlawing direct and indirect discrimination in relation to terms and conditions and, therefore, requires that hypothetical comparisons must be possible in that regard, in the same way as they would be in relation to race. That would bring the situation into line with European law.
Also, Unison says that the EU equal treatment directive allows hypothetical comparisons. The Bill, therefore, should allow the use of hypothetical comparators when no actual comparator exists. Interestingly, Unison says that such comparators ought to be permissible, while the EDF says that they ought to be a requirement. I would like to probe the Minister further on why she thinks that those organisations are still clamouring for a hypothetical comparator to be admittedto be a requirement or to be permissible. All the work that she said is going on does not suffice to satisfy Unison or the EDF. I wish to test her further on that issue.

Vera Baird: Organisations, as quoted, do press for that. They are also engaged with uson the one hand they take up a campaigning position, clinging to hypothetical comparators as the magic elixir, but on the other hand they engage with us on all the other things that we are doing and appreciate that there is a lot of progress as well. There is nothing contradictory in that position, but the hon. Lady needs the context for her assertion that all those people consistently press for that.
There is some case law under article 141 of the treaty of Rome, in which the European Court of Justice has looked at the issue. It has consistently required an actual comparator to be identified for the purposes of an equal pay claim under the article. There is nothing in any pending directive that is likely to change that position. We find that to be a difficulty in accepting what the hon. Lady said.
There is, though, a recipe for confusionI hope that I have expressed myself using the appropriate technical language, but all sorts of things can happen, which the hon. Lady is probably familiar with. Take for example a person in job Aa gardenerwho wants to assert that he should have equal pay to the caretaker, and they are both men. If a hypothetical comparator were available, one could assume that one person was a woman and compare the pay of the man with the theoretical woman to see whether they should have equal pay. That has nothing to do with discrimination and pay; it concerns an argument that is better taken on by a trade union. The hypothetical comparator has real, practical drawbacks, as well as the ones that I have set out, and as well as the partial bar from Europe on taking it on.

Evan Harris: My hon. Friend read out a note from the Equality and Diversity Forum, which is a serious organisation. I should like some clarification on that point, because the forum was referring to the directive of the European Parliament and the Council of 5 July 2006 on
the implementation of the principle of equal opportunities and equal treatment of men and women in matters of employment and occupation (recast).
It says that the directive has been fully in effect from 15 August 2008 and that it requires that hypothetical comparisons must be possible in that regardas mentioned by my hon. Friendin the same way that they would be in relation to a race case. That is an assertion of fact with which I presume the Minister disagrees. If she could put on the record that she thinks that that is wrong, that would be helpful for later discussions.

Vera Baird: I would have thought that that was an assertion of law; it is one with which I disagree and so do the Government. I acknowledge entirely that EDF is a fine organisation. It is an organisation of organisations and we are happy and grateful to it for helping us all the way through the Bill. The tentacles that it has into equality and diversity are massively important to ensure that we are always in touch with people on the front line.
In summary, however, we do not believe that hypothetical comparators are either workable or required. We fear that allowing their use would create significant unintended consequences, some of which I have set out technically, and others I have exemplified. We have therefore decided, on balance, that ensuring pay equality is better served by maintaining our current approach. Clause 66 contains a provision to allow claims where there is evidence of direct discrimination in relation to contractual pay. I hope that the Committee will welcome thatit closes a gap in the current law. This law is better than it has been before, even in this specific way.
We will reflect carefully on what has been said, but we are not able to offer satisfaction today. I invite the hon. Lady not to press her amendment to a Division. However, it is good that we have had the discussionwe are, as she put it, all driving in the same direction. We are satisfied that we have a better state of affairs for the drive towards equal pay than that which she offers, but none the less, we appreciate that it is a tenable view that she is right.

Joe Benton: Just before the hon. Member for Hornsey and Wood Green indicates her intention, I want to ensure that she is aware that we are discussing clause stand part. If the Committee agrees to that, it negates her amendments. I want to clarify that so that the Committee is aware of the procedure. If it is her intention to pursue the amendments and the new clause, the stand part element has to be opposed.

Lynne Featherstone: Thank you, Mr. Benton. All help towards my understanding procedures is gratefully received. I intend to divide the Committee on clause stand part.

Question put, That the clause stand part of the Bill.

The Committee divided: Ayes 10, Noes 3.

Question accordingly agreed to.

Clause 59 ordered to stand part of the Bill.

Clauses 60 to 63 ordered to stand part of the Bill.

Clause 64

Defence of material factor

Question proposed, That the clause stand part of the Bill.

Joe Benton: With this it will be convenient to discuss new clause 25Defence of material factor (No. 2)
(1) The sex equality clause in As terms has no effect in relation to a difference between As terms and Bs terms if the responsible person shows that the difference is because of a material factor
(a) which does not constitute discrimination because of sex within the meaning of section 13, and
(b) which is within subsection (2).
(2) A factor is within this subsection if
(a) as a result of the factor, A and persons of the same sex as A are or would be put at a particular disadvantage when compared with persons of the opposite sex, but
(b) the responsible person shows that relying on the factor is objectively justified by a legitimate aim and the means of achieving that aim are appropriate and necessary.
(3) A sex equality rule has no effect in relation to a difference between A and B in the effect of a relevant matter if the trustees or managers of the scheme in question show that the difference is because of a material factor which
(a) does not constitute discrimination because of sex within the meaning of section 13 and
(b) which is within subsection (2).
(4) Relevant matter has the meaning given in section 62.
(5) For the purposes of this section, a factor is not material unless it is a material difference between As case and Bs..

Lynne Featherstone: As currently worded, the clause allows employers defending equal pay claims to avoid the need to justify discriminatory pay objectively. Subsection (l)(a) allows employers to defend a claim by simply pointing to another reason for the pay differential that is not sexnot a protected characteristic, that is, sex. An employer only needs to refer to paragraph (a) because there is an or at the moment, rather than an and. If the employer cannot find or identify another reason, it is only then that the obligation kicks in to justify the differential in pay objectively.
That is inconsistent with European law and the decisions of the European Court of Justice in equal pay cases appealed from the UK. In practice, it means that where there is a female-dominated group, such as cleaners or home care workers, in local government, where it has been established that they should be paid the same rates of pay and bonuses as a comparable male-dominated group, such as road sweepers and refuse collectors, all the employer has to do to get out of equalling the pay is to identify a reason for the difference which is not sex. That reason could be something like the need to improve productivity or a need to recruit and retain staff in an environment where one particular gender was difficult to recruit. Once the reason has been identified, there will be no imperative for the employer to justify that reason objectively, and no obligation for them to show that there is a genuine need to improve productivity, that recruitment of a particular gender is difficult, or that the need is a proportionate or necessary reason to perpetuate the discrimination in pay. All the employer needs to do is to cite the other reason without any examination of the strength or veracity of that reasoncarte-blanche really, so long as it is not covered by subsection 1(a).
The important point is that the female and male worker groups do jobs of equal value, and that equal value, by that stage, should have been evaluated as being equivalent under a recognised job evaluation scheme. It is only after that equality has been proved that the employer is able to raise the defence of material factor. It is important that the defence is fair and complies with European law.
The clause replicates the worst aspects of the judgment made in law under the Equal Pay Act 1970, a decision that has been roundly criticised and is currently under appeal in two cases at the Employment Appeal Tribunal and Court of Appeal. This is therefore a golden opportunity to bring United Kingdom equal pay law back into line with European law.
We have left out from our new clause subsection (3) on pay protection. I understand that the Governments intention is not to scare the horses. For example, when pay has to be equalled up, if the disparity is huge and public sector organisations are faced with levelling pay, clause 64(3) allows for the long-term objective of reducing inequality. The Liberal Democrats want to test the Minister on that because it seems very much like letting them off the hook. Subsection (3) attempts to deal with the pay protection for groups of workers whose pay is reduced as a result of removing discrimination in pay.
For the majority of negotiated equal pay outcomes that seek to bring the pay of underpaid groups up to the level of the rates enjoyed by the comparable higher-paid work groups that does not simply involve raising the pay of the lower paid to that of the higher paid. It is important to note that many women and men have their pay reduced as a result of job evaluation in local government, and it is not always simple to state that it is necessarily men who are highly paid and that only women are underpaid. That said, there are often situations when large male-dominated groups are the subject of dramatic pay reductions and receive pay protection. As a result, what generally happens is that the higher-paid groups have their pay reduced and underpaid groups have their pay increased. In pay protection, the pay of groups rated as equal in a job evaluation is set somewhere in the middle of those two positions.
To have a system that requires employers to bring the pay of underpaid workers up to the level previously enjoyed by the higher-paid groups would be financially very difficult. I understand completely why, three years in, the majority of employers would find it hard if such a process had to be carried out immediately. I assume, therefore, that subsection (3) is about transitional arrangements, but the use of the phrase long-term would give far too much power and timing to the employer and less consideration to the employees.
Pay protection will be acceptable only if it is for a limited period, and the clause as drafted makes pay protection that perpetuates discrimination in pay unlawful. That is because such protection cannot be seen to have the purpose of reducing the gender pay gap and would therefore not be justifiable. It would make it difficult for all parties who genuinely desire a negotiated resolution of pay discrimination, and will create uncertainty. I should welcome the Minister exploring that long-term measure so that I can understand better if something in the clause will protect against an open-ended, kick-into-the-long-grass outcome. I await her response.

Vera Baird: I am struggling to identify the case to which the hon. Lady referred. Can she give me more information so that I can take it on board?

Lynne Featherstone: I am trying to find the reference. I was assured that I had it, but I do not now seem to have it to hand.

Vera Baird: Okay, I will press on without the reference, although I might not be able to deal with the point made without the case being identified. New clause 25 would replace clause 64, which restates and clarifies the existing position of the definition of a general material factor. They are not a massively different remit. First let me concentrate on three aspects of the hon. Ladys amendments, and then deal directly with the pay protection points. It may be that she can find the case in the meantime. If not, we will have to correspond about the precise terms.
New clause 25(2)(a) deals with the hypothetical comparator point again, as it says that
A and persons of the same sex as A are or would be put at a particular disadvantage when compared with persons of the opposite sex.
That would stop us taking on the new clause in the first place, as it is about the hypothetical comparator.

Lynne Featherstone: I am not sure that it is quite of that nature. The first part of the wording is taken directly from clause 64(1).

Vera Baird: This is subsection (2)(a).

Lynne Featherstone: I apologise. I was looking at the wrong subsection.

Vera Baird: I thought I had said (2)(a), but I may not have said the right section. What the hon. Lady has drafted, as a result, in subsection (2)(a)
A factor is within this subsection if
(a) as a result of the factor, A and persons of the same sex as A are or would be put at a particular disadvantage when compared with persons of the opposite sex
is a direct reference back to the hypothetical comparator point.

Lynne Featherstone: If the Minister returns to subsection (1) of both clause 64 and new clause 25, she will see that the only difference is the word and instead of or.
A factor is within this subsection if
is the argument about and and or rather than the hypothetical comparator. If one leaves in the or, the issue is in subsection (2), which is
objectively justified by a legitimate aim.
The aim here is not to address simply a hypothetical comparator, but the ability of an employer to point at any reason for a differential in pay other than sex as the protected characteristic covered by paragraph (a).

Vera Baird: The summary of the way the defence operates was not entirely accurately put by the hon. Ladywhere a factor directly discriminates against women, the defence fails; where it indirectly discriminates, it must be objectively justified. A factor that is not gender discriminatory must be material and significant, but where there is no discrimination, there is no need for a justification. That is fairly straightforward.
Clause 64 reflects the position under European law, and if I have misunderstood subsection(2)(a), I will just pass over it. The next point is that the objective justification test for indirect discrimination would, in the new clause, replace the concept of proportionate means of achieving a legitimate aim with the preferred usage appropriate and necessary. That is a block that we have already run round a couple of times. We worry that the term necessary can be, and has been given a overly narrow interpretation domestically. For that reason, and among others that I cited earlier, we do not want to make that change.
Lastly, the new clause is directive because the word and between subsections (1)(a) and (1)(b) requires a responsible person to show that the factor that he seeks to rely on is neither directly nor indirectly discriminatory as set out in subsection (2). On the other hand, clause 64(1)this is the point that I have just madeprovides that a responsible person must show that the factor is not the difference of sex or indirectly discriminatory within the meaning of subsection (2). We do not think that there should be a burden on the responsible person to disprove any indirectly discriminatory effect of a material factor, unless the claimant puts forward some evidence suggesting that there is such an effect. The and, as opposed to the or, would be unnecessarily onerous on the responsible person, unless there was evidence to suggest that there was a discriminatory effect.
Obviously there is a need for a material factor defence, and I do not think that the hon. Lady is saying anything different from that. The explanatory notes give one example, which is about a bonus payment. It would largely benefit male employees in this example, and can be justified because it is a proportionate means of achieving the legitimate aim of encouraging employees to work unsociable hours. There are almost fine shades of distinction between the hon. Ladys clause and our clause, when we are driving at the same purpose, but the two aspects that I have referred to make her clause unacceptable.
I should draw to the Committees attention points about clause 64. It removes the word genuine, which many of us are used to when describing the material factor defence, but it does not change the substance of the current law. I want to make that clear. Employers will still have to show that the factor is not a sham or pretencesubsection (1) makes it clear that the difference must be because of the material factors. It will have to be real. Secondly, subsection (2) incorporates the effect of European Community law in respect of objective justification of indirectly discriminatory factors.
Finally, subsection (3) contains a new provision, stating that the long-term objective of reducing pay inequality is always to be considered a legitimate aim for the purposes of subsection (2)the hon. Lady characterised that as the long grass provision. It is intended to acknowledge that strategies to reduce long-term pay inequality may need a reasonable time to work before equality is achieved. It is not intended to be a get out of jail free card for discriminatory employers. Any action taken to achieve that aim has got to be proportionate, but we intend to encourage those on both sides of pay negotiations to move forward.
The hon. Lady talked about pay protection. As she rightly said, where there is unequal pay, the availability of consensual arrangementsnegotiationsis important in coming to a situation in which the move, albeit direct, deliberate and steady, towards equal pay is done at a rate that is realistic for the employer in question. To drive that agenda, we put the provision in, making it clear that there is, as it were, a statement about that being a practical and acceptable way forward. The provision is certainly not intended to let employers off the hook.
In the example referred to by the hon. Lady, unless the pay protection had the effect of gradually bringing the parties closer within a foreseeable time, all that would be done is to re-entrench the previous discriminatory unequal pay. Theoretically, a further action could be brought. Unequal pay will always have to be drawing nearer to equality; the provision just acknowledges that there is sometimes a need for delicacy, but we intend that process to happen as quickly as it can.

Lynne Featherstone: I have listened carefully to the Minister and we are not miles apart, to be honest, except on that interpretation of the first differential between or and and. I shall go back and have a look at it in light of what the Minister has said. I shall be looking at what might be termed transitional arrangements but, for the moment, I am happythe Minister has tried to answer my questions. On that basis I shall not press for a Division.

Question put and agreed to.

Clause 64 accordingly ordered to stand part of the Bill.

Clause 65

Exclusion of sex discrimination provisions

Question proposed, That the clause stand part of the Bill.

Lynne Featherstone: Forgive me, Mr. Benton, but are we not on amendment 258?

Joe Benton: The Question is that clause 65 stand part of the Bill.

Evan Harris: On a point of order, Mr. Benton. May I apologise? The reason for the confusion is that we tabled an amendment to leave out the clause, but that is not printed on the list. My hon. Friends intention is to speak briefly to clause stand part, because there is an argument to leave it out, if that would be acceptabledespite the double attempt to move that proposal.

Joe Benton: One grows used to such things. To clarify, amendment 258 was not selected and therefore cannot be moved. However, I will allow a discussion on clause 65 stand part.

Lynne Featherstone: Thank you, Mr. Benton, you are very kind. I thank the Committee for its patience.
The threshold for bringing an equal pay case is higher than for direct discriminationit is more difficult to bring a case. That is because a person must find a real comparator against which they can show that they are being discriminated against, which is not always possible, and a person who discriminates can use the material factor defence where one exists. Neither of those hurdles applies in direct discrimination cases.
Being paid differently because of gender is clearly a detriment. Rather than impose a higher threshold to be able to take a case to end pay discrimination, the Bill should make it easier to take action. The scale of pay discrimination against women should make us favour concrete measures that make ending such discrimination easier. Removing the clause would enhance protection for people who face pay discrimination because of their gender. Where they cannot find a real comparator, or the discriminator finds a spurious material factor defence, the door would still be open to take a direct discrimination case. On that basis, I wanted to argue against the clause.

Vera Baird: I do not know whether the hon. Lady seeks to remove the clause on the basis that it would change the existing law. The short answer is that it would not. That is our firm conviction, and I am happy to explain why. I do not wish to put her in a hot spot, but if she thought that the clause would change existing law, I can explain why it would not outside the Committee if that is quicker.

Evan Harris: It is not our suggestion that the clause would change the existing law. We contend that the existing law has not worked. The fact that one has to go through this route to make the claim is one of the many reasons why it has not worked, and we know that the Government share our concern.

Vera Baird: Then I will set out how we think the provisions work. The sex discrimination provisions of the Bill do not apply where the equality clause or rule provisions operate. It is right to ensure that a remedy for a particular wrong is a single specified remedy rather than a matter of choice from a menu, and that is what the clause achieves. We have already discussed our general approach to equal pay in the Bill. Essentially, equal pay is contract-based, achieved by modifying or reading in a term of an employees contract of employment to ensure equality with a colleague of the opposite sex doing equal work. We have maintained that position in the equality clause provisions of the Bill.
In A Framework for Fairness, we consulted on whether to maintain that contractual approach, and a significant majority of respondents favoured it, although I recognise that some take a contrary view. We have tried to adjust the relationship between equal pay and the discrimination provisions to ensure that there is no gap by allowing claims of direct discrimination in respect of contractual pay. I think that I said that in a previous debate as well. As we have already discussed, we believe that doing away with the separate contractual approach could lead to considerable uncertainty and confusion.
The sex discrimination provisions listed in the table apply only to non-contractual pay and benefits such as promotion, transfer and training and to offers of employment or appointment to office, except as provided by clause 66 in respect of direct discrimination. For example, if a company offers more training or promotion opportunities to men because it believes they will stay longer than women, a claim of sex discrimination by the women would come under the sex discrimination provisions. If it is not clearthis might be what is concerning the hon. Ladywhether a particular claim relates to benefits that are contractual or non-contractual, it can be made, as is currently the case, under both provisions, and the tribunal will, to put it in technical language, sort it out.
The clause also maintains the distinction between the provisions for equality in terms of occupational pension schemes and the provisions that prohibit sex discrimination in giving access to such a scheme. It is worth pointing out that where a woman cannot identify a comparator doing equal work and wants to make a claim involving contract terms not relating to pay, such as promotion, the sex discrimination provisions will apply to such a claim. Again, the position is the same as before. I understand the change that the hon. Lady seeks, but the Government see the clause as an essential aspect of the functioning of the Bill. I hope that the Committee will therefore agree that it should stand part of the Bill.

Lynne Featherstone: It is extremely helpful to have such a cogent explanation of what the clause does and does not do, and what the law would probably say and not say in interpreting it in future, so I thank the Minister.

Question put and agreed to.

Clause 65 accordingly ordered to stand part of the Bill.

Clauses 66 to 71 ordered to stand part of the Bill.

Clause 72

Discussions with colleagues

Question proposed, That the clause stand part of the Bill.

John Penrose: The clause is important and I wish merely to put on the record my partys support for it. As the explanatory note says, it is designed
to protect people who discuss their pay with colleagues
and to ensure that if any firm seeks to impose a pay secrecy clause, which might be a mechanism for covering up gender pay inequality, it does not work and cannot be applied. I state on the record my partys thorough support for the clause. It will be particularly important when we come to discuss the wider issue of gender pay audits in clause 73. It is, in our view, a thoroughly sensible and proportionate way of attacking part of the problems of the gender pay gap. It is entirely reasonable and proportionate to the problem in hand. I just wanted to ensure that it was on the record that my party is thoroughly in favour of the clause and will support it.

Lynne Featherstone: I, too, welcome the clause. By introducing it, the Government will have rolled back some of the disparities and the secrecy that there has been around pay since time immemorial. That is one of the great inhibitors to individuals being able to know whether they have something to be aggrieved about. The clause is a start but, when we come to the next clause, we shall expand on the issue far more widely.

Vera Baird: I am grateful that both Opposition parties have said that they support the clause. The Government think that it is necessary and a good move forward, as they do. For the sake of clarity, I emphasise that the clause does not require anyone to disclose their pay if they do not want to. It does not stop employers preventing employees from discussing their pay with or disclosing it to competitors or other people who are not colleagues of the employee, so it should not have any unintended consequences. We think, as colleagues do, that the clause is a useful tool to promote pay transparency and hence equality.

Question put and agreed to.

Clause 72 accordingly ordered to stand part of the Bill.

Clause 73

Gender pay gap information

Lynne Featherstone: I beg to move amendment 248, in clause 73, page 55, line 19, leave out 250 and insert 100.

An amendment to reduce the number of people an organisation must employ in order to be subject to the gender pay gap clause requirements.

Joe Benton: With this it will be convenient to discuss new clause 23Gender pay gap information (No.2)
(1) Subject to the provisions of this section, no less than every three years a designated employer shall publish information relating to the pay of its employees for the purpose of showing whether there are differences in the pay of male and female employees.
(2) The information relating to pay which a designated employer shall publish includes
(a) the average hourly pay of male workers and the average hourly pay of female workers within its employment;
(b) in respect of each role within the organisation
(i) the average pay awarded to workers engaged in the role;
(ii) the percentage of men and women engaged in that role;
(iii) the gap, if any, between the average hourly pay of male and female employees in that role; and
(iv) the average length of service of men and women engaged in that role;
(c) information identifying
(i) any descriptions of activities carried out in the course of employment with the employer by any group of workers who are wholly or mainly women;
(ii) any descriptions of activities carried out in the course of employment with the employer by any group of workers who are wholly or mainly women;
(iii) the relative values of the descriptions of activities falling within sub-paragraphs (i) and (ii); and
(iv) in relating to descriptions of activities within sub-paragraphs (i) and (ii) which are judged to be of equal value to each other, the average hourly pay of male workers and average hourly pay of female workers carrying on those activities.
(3) For the purposes of this section, pay means the ordinary basic or minimum wage or salary and any other consideration, whether in cash or kind, which the worker receives directly or indirectly, in respect of his employment, from his employer and includes the cost to the employer of
(a) any pensions contributions paid by the employer in respect of the worker,
(b) any bonus or other performance related or incentive payment, and
(c) any discretionary benefit granted to a worker in connection with his or her employment.
(4) The Secretary of State shall prescribe by regulations any further information which employers must publish pursuant to subsection (1), the form in which the information must be published, and the degree of publicity to be made.
(5) In make such regulations the Secretary of State shall adopt best practice for promoting awareness of the nature and causes of any pay gap between persons of different genders as set out by the International Labour Organisation from time to time.
(6) The Secretary of State shall consult with the Equality and Human Rights Commission as to how to ensure that the regulations shall contain best practice prior to the making of the first regulations and no less than every five years thereafter and shall amend the regulations as necessary to ensure that best practice is maintained.
(7) Where an employer fails to publish information in accordance with this section then an employer shall not be entitled to submit a material factor defence in accordance with section 64 in relation to any period for which they are in breach of their obligations under this section.
(8) Where the information published by an employer reveals that there is a difference in the average pay of men and women doing relevant types of work as set out in section 59, then in any proceedings to enforce a sex equality rule or a sex equality clause it shall be presumed that there is such a breach unless the employer can show a material factor defence.
(9) The regulations may make provision for a failure to comply with the regulations
(a) to be an offence punishable on summary conviction by a fine not exceeding level 5 on the standard scale;
(b) to be enforced, otherwise than as an offence, by such means as is prescribed.
(10) The reference to a failure to comply with the regulations includes a reference to a failure by a person acting on behalf of an employer.
(11) An employer shall publish information pursuant to subsection (1) within one year of the coming into force of this Act.
(12) Where an employer (A) is able to determine the terms and conditions of employment as between another employer (B) and its employees, A shall publish the information that B would otherwise be required to publish in a way which is consolidated with the information for all other employees of A whose terms and conditions A may determine, and where A publishes consolidated information B shall not be in breach of this section if it does not publish any information.
(13) A designated employer means an employer who has more than 100 employees..

Lynne Featherstone: The amendment is designed to probe the Government on the decision that they have made on the number of employees that an organisation must employ to be subject to the gender pay gap clause requirements when they arise. The Government refer to 250 employees in the private sector. I do not fully understand why that number has been selected. In our evidence session, reference was made to a reduced number. Women Like Us said that organisations with 100-plus employees often have dedicated human resource departments or facilities, so issues would not be too onerous as such departments should be able to contribute their experience of auditing. It was also said that the reference to 250 employees leaves out of the gender pay audit requirement a huge proportion of businesses in the United Kingdom. About half the people in the United Kingdom are employed in businesses with fewer than 250 members of staff, so huge sectors of the population would not be provided with protection under the Bill, when the regulations come into force. Given that 80 per cent. of the population are not employed in the public sector, will the Minister explain why the figure of 250 employees has been chosen?
I am saving some remarks to the end of the debate, but I now move to new clause 23. It would extend the period for publishing information to three years. That is a reasonable timetable. It would not be too onerous, nor would it be so irregular as to be out of date. Subsection (2) of the new clause deals with the information that must be published and would distinguish the differentials between male and female pay in an organisation. The information published under paragraph (c) would highlight discrimination in the types of work undertaken wholly or mainly by women so that we can see what is being done and by whom, how that work is valued, whether it is of equal value and whether the pay demonstrates an unjustified differential or a legitimate aim subject to the defence of a material factor.
In our evidence session, we heard from the Fawcett Society that, if we are to eradicate discrimination and unequal pay, we have to evaluate the skills and experience that are required for jobs and check whether individuals in equivalent jobs are being paid equivalent salaries. That is why new clause 23 proposes publishing both the levels and types of work. Womens work is often undervalued and major cases have involved equal value in the public sector. That undervalue has delivered low pay for women for decades. It has not been adequate simply to have provisions that make that illegal, which is why pay audits are necessary they make sure that checks are in place so that people are not discriminated against.
It is only by seeing how people are treated compared with others at levels and types of work that we will ever be able to bring a case to a tribunal to right those wrongs. If we cannot find that out, the gagging clauses that we referred to earlier, while they are extremely welcome and helpfulfor which I say, Well done to the Governmentwill not give the overall picture to enable an individual to make a judgment about a companys relative pay or jobs.
The Conservative amendment of only imposing mandatory pay audits when there is a finding against a company will not work. It seems to be logical to punish when there is something judged to be punishable, but the reality is that such a policy will not address unequal pay because the individuals cannot get the evidence to bring the matter to a tribunal to get the judgment. As I understand it, the company would be required to publish mandatory pay audits thereafter. That will not address the issue in the first place. It will not provide the evidence.

John Penrose: I point it out to the hon. Lady that we have not tabled, or had selected, an amendment that goes through Conservative policy. She is right to say what Conservative policy is, although obviously we would disagree about her analysis of its shortcomings, but we cannot necessarily enter into a debate on what she is saying without an awful lot of latitude from the Chair, because no such amendment is selected for debate.

Joe Benton: Order. My mind was going along that avenue. We have been straying a little from amendment 248 and new clause 23. Perhaps we can confine ourselves to them. I shall allow the widest debate I can, but we are dealing with those amendments.

Evan Harris: On a point of order, Mr. Benton. I think that my hon. Friend is setting out a different approach to pay audits and contrasting it, quite reasonably, with the Governments approach. I must say I wondered to what extent she might refer to alternative approaches, in proposing her new regime, which is supported by the Liberal Democrats.

Joe Benton: I have indicated that I am prepared to allow the broadest possible debate, but I want to sound a cautionary note about constant references to a Conservative amendment that is not going to figure anywhere.

Lynne Featherstone: Thank you, Mr. Benton. I merely wanted to say that any such idea would not provide the same rigour as mandatory pay audits, which can be viewed by an individual to reveal whether there is discrimination against them in pay level, work type or conditions, or more widely.
Subsection (3) of the new clause deals with packages in connection with pay. Those are often left out of such debates. The subsection would introduce the idea that the entire package, not just the pay itself, should be considered. I looked at the issue with reference to Cambridge university, and it was clear from its pay audit, which was published voluntarily, I believe, that men were being offered much better packages, including such things as accommodation and moving costs, to bring them to the job, whereas women on the same pay grade, perhaps, were not being offered such packages. That is discrimination.
In one establishment, where most market supplements for higher grades were for men, one administrator was getting 125 per cent. of salary as a market supplement. That is back-door discrimination, and we want that eradicated. It operates outside pay levels and work type, but is to do with the package that goes with getting the job. I am using that only as an example of the sort of discrimination that can happen outside the pay level. Subsection (3) would require publication so that any such bias inherent in a company would be made transparent.
Subsection (7) of the new clause would provide teeth, so that action could be taken if there was failure to publish. An employer who failed to publish would lose the right to use or submit the material factor defence for the period in which there was failure to comply with the requirement.
Those are the essential points of the new clause, apart from the fact that it would define a designated employer as one with more than 100 employees, referring back to amendment 248. I shall be pleased and interested to hear what the Minister has to say.

John Penrose: I applaud the hon. Ladys instinct in tabling the two amendments, even though I suspect that we would disagree strongly about the means and mechanisms. It is important to put it on record that I hope and expect Committee members from all parties to share the common goalI am sure that we doof reducing and eliminating the gender pay gap by whatever means necessary.
However, we disagree with the hon. Ladys proposed mechanisms. Although a degree of employer-based discrimination is clearly part of the gender pay gap, most analyses also make the valid point that a number of other important factors are at work. It is important not to pursue or base legislation on the notion that employers are the only cause. It is also necessary to ensure that any means that we take to drive through reduction of the gender pay gap are proportionate.
With your permission, Mr. Benton, I will expand on our concerns during clause stand part debate, but we contendI think that the Governments own analysis supports thisthat the gender pay gap has many other causes, which have to do with disadvantage in society in everything from access to education and onwards. However, within companies where differentials exist between mens and womens pay, any direct discrimination must clearly be dealt with vigorously and strongly. That is why, during our debate on clause 72, the hon. Lady and I both emphasised our support for measures designed to ensure that it is illegal to have a contract term that stops men and women in the same company communicating about their pay. That is an important mechanism. However, there are many other reasons why pay differentials might exist in the same company. For example, women might not be well represented at senior levels. That would inevitably lead to differentials.

Lynne Featherstone: I believe that the hon. Gentleman made the same point to the panel during the evidence session. When the Fawcett Society was asked how much of the pay gap could be laid at the door of discrimination by businesses rather than other factors, it was extremely robust, saying that
when people have decomposed the gender pay gap to look at the different elements that contribute to it, discrimination is the largest factor of all.[Official Report, Equality Public Bill Committee, 2 June 2009; c. 57, Q114.]

John Penrose: I am glad that the hon. Lady brought that up. Although the Fawcett Society witnesses did not mention which document they were referring to, they might have been referring to a research finding from the Equal Opportunities Commission on modelling gender pay gaps, which says that the largest single underlying cause of gender pay gaps, at 38 per cent., is
due to other factors associated with being female, including direct discrimination and differences in the labour market motivations and preferences of women as compared with men. Some of this will be attributable to indirect discrimination or systematic disadvantage.
The Fawcett Society was right to say that the largest single element includes direct discrimination. However, it is not true to say, and I do not think that the Fawcett Society was saying, that the largest single element is direct discrimination. That 38 per cent. includes several other crucial factors, which previous Governments have addressed, and the current Government, and I hope future Governments, will continue to address via different mechanisms. Frankly, those factors should not be addressed via discrimination. It is not necessarily true to say that direct discrimination is the largest factor. In fact, in all probability it will be only a subset of 38 per cent.

Evan Harris: Even if we accept that it is not the largest factor, given that the hon. Gentleman said that like previous Governments, this Government and future Governments want to tackle everything else, there seems to be no good reason not to seize the opportunity set out in my hon. Friends new clause to tackle that component. It is only justifiable not to do so, or to seek to do so in a weaker way, if they do not think that it is a problem. To leave out employers from the package of measures is in itself disproportionateit is out of proportion because there is a problem and no solution is being proposed, or not a strong enough one. That is where the disproportionate consideration comesnot that this measure is disproportionate.

John Penrose: I thank the hon. Gentleman for, I think, making my point. He is right to say that we cannot ignore direct discrimination by employers and I am sure that everyone agrees with that. That is why the hon. Member for Hornsey and Wood Green and I both rose to make the point on clause 72 about making sure that there is better pay transparency by ensuring that it is illegal for employers to make it a contract term that people cannot discuss their pay with their colleagues at work.
Conservative policyI will not try Mr. Bentons patience, but the hon. Lady mentioned it, so I shall illustrate itis that we believe it is sensible to have pay audits for companies that have been found to be directly discriminating. That is clearly a sensible step to take in such situations. However, our contention is that it is a disproportionate approach to companies that have not been found to be involved in direct discrimination in other cases, because of all the other factors that are also at work.

John Mason: The hon. Gentleman is setting an almost impossible barrier by saying that, in the first place, discrimination has to be proved, and then there has to be an audit or information has to be provided. Surely one of the themes of the past few weeks has been that providing information is inherently a good thing and if an employer has particular reasons for differences, they could presumably then explain them.

John Penrose: I thank the hon. Gentleman for his intervention. I do not think that the barrier is impossible at allit is perfectly reasonable. Again, it is important to assess the degree of proportionality: what is the size and cost of the burden that we are imposing to address the particular part of the gender pay gap that we are seeking to sort out? The costs of the hon. Ladys proposal would be on the wrong side of that line. Our contention is that ours is a modest and reasonable way of balancing the two.
I take the hon. Gentlemans point that there is a balance to be struck and that is what we are trying to do. That is why I was clarifying our reason for agreeing with the end that the hon. Lady is striving towards and our concerns about the proportionality of the means rather than anything else.

John Mason: The hon. Gentleman mentions costs. Surely, in this day and age, with computer systems as they areI have worked in a number of small organisations which have quite sophisticated computer systemsthere is not a great cost in providing the information.

John Penrose: The hon. Gentleman comes on to a point that I plan to make in the clause stand part debate about the Governments impact assessment. I shall confine my remarks for the moment to quoting a comment which is attributedalthough many areto Jack Welch, former, much celebrated chief executive of General Electric in the States. When he was being presented with a very long and involved set of financial projections by someone from General Electrics finance department, which involved detailed calculations that were expressed to many decimal points, he looked at the chap making the presentation and said, Son, I dont know about the accuracy of those last two digits in that number, but I am pretty sure that the first one is wrong. I feel that the calculation of the costs of this measure is woefully under-egged, which goes directly to my contention about proportionality.

Evan Harris: The hon. Gentleman argued briefly that it is legitimate to do the audit work where a case of direct discrimination has been identified. However, if one knowsone does know and we can argue about the degree to which it is a factorthat it is endemic, that is like arguing that people should be advised to eat healthily only after they have had a heart attack. That misses the point of the whole range of people whose health would benefit from that. Will he explain the rationale for such an after-the-fact approach, even if it were to work?

John Penrose: I would use a different analogy, which is that people, and in this case companies, should be innocent until proven guilty. The hon. Gentleman is right to say that there is a degree of direct discrimination, but by describing it as endemic he is assuming that all companies are guilty of it. That is a dangerous assumption, which is not necessarily supported by any data. A large number of companies have taken enormous steps, and the data that I will quote lateragain provided by the Office for National Statisticswill show that there have been real steps in reducing the gender pay gap since the equal pay legislation was first passed. We have still further to go, but it is deeply unfair and inaccurate to assume that all companies are guilty of gender pay discrimination and direct discrimination. There is no evidence for that.

Evan Harris: Reluctant though I am to go to the dictionary, given what the Minister said previously, medically endemic does not mean that everyone has a condition, but that it is widespread and ingrained. The allegation that I said every company is guilty is wrong, and the hon. Gentleman understates the issue by saying that only those found guilty have a problem. He thinks that the problem of the pay gap and direct discrimination has not been a big enough problem for enough peoplewomenfor long enough for more action to be imposed on employers. That is the nub of the political disagreement between us. I suppose that is why we have politics and elections.

John Penrose: I thank the hon. Gentleman for his dictionary definition, which, I hope, makes it clear that he does not think that all employers, or even a majority, are involved in direct discrimination. I hope that he thinks that it is a minority of employers, and a reducing minority. My point is that it is unfair to assume that everyone is guilty until proven innocent.
I would pick up the hon. Gentleman on his attempt to put words into my mouth about the description of Conservative policy. I believe it is important to apply the measures. [Interruption.]

Joe Benton: Order. There is far too much background noise.

John Penrose: I had just finished.

Vera Baird: Obviously, we will have a clause stand part debate, so let me not spread my remarks too widely. In relation to the comments of the hon. Member for Weston-super-Mare about all companies being innocent until proven guilty, without a provision such as clause 73 companies would be able to hide their guilt by not disclosing the figures. Surely that is the major policy difference between usand probably the Liberal Democratsand the Conservatives. He says that there should be a mandatory pay audit when direct discrimination against someone is proven, but, as we all know, such cases rarely get to court. It is a tour de force to get one, as it requires a lot of courage for a person to be present.
As for the nature of the proposed pay audit after a finding of unequal pay in a tribunal, it would be mandatory for the tribunal to impose the pay audit on the business, even if the case itself had had the effect of making a business put its business right. That would be absolutely onerous on business and is a fatal flaw in the Conservative proposals.

John Penrose: Will the Minister expand on her comments about the difficulty of getting information about pay inequality? We have just had a brief stand part debate on clause 72, which provides important clarification and transparency. I hope she will acceptI am sure that she does, because it is a Government clausethat that is an important mechanism for improving and introducing transparency in future of the kind that she has described.

Vera Baird: It is a useful tool, as we all agree. The provision is about one-to-one disclosure and is relatively modest. Unequal pay is systemic and we have to find a way of getting it out of the system. Much of the time the only way to do that is to make people disclose that it might be there. If it is not, there is no problem. If it is, they must disclose it so that we can get rid of it, or we simply have no way of getting through. Although that is not the only difficulty with the legislation that we have had since 1974, it is a key one.
It is fine to give someone the right to bring an action for equal pay, but if they do not know that they are suffering from unequal pay, then it is hard to exercise such a right. We have to go way beyond the previous clause, which would allow me to ask the man sitting next to me whether he is getting £10 more an hour than I am. That is obviously a first step, but there is a need for a great deal more transparency across the piece before we can start to tackle continuing pay discrimination.
I do not think that the hon. Gentleman takes on board the nature of pay discrimination. He argues that businesses are not all bad or even endemically bad, but the Government do not begin from the position that there is something inherently bad about business. However, we must appreciate that direct discrimination continues and that it is a component. I do not know whether it is a very large or very small componentI suspect that it is significantbut requiring the disclosure of pay information is about not only direct discrimination, but indirect discrimination. That fact is totally left out whenever he argues that we are driving at a tiny bit of unequal pay with our anti-discrimination measures. It is not tiny; it is a very significant part of unequal pay.
I say that to be as fair to business as I can: I am pretty satisfied that experience shows that the kind of disclosure that we will require through the mechanisms in clause 73 often takes businesses by surprise. Some businesses have not deliberately had indirectly discriminatory provisions, although some probably have. Discriminatory provisions might result from a business never having looked at them. They might also result from historic mergers, separations and reorganisations. It might be that nobody has evaluated whether component A of the business in warehouse Z is being underpaid in relation to warehouse Y in another part of the country. None the less, the employer is the same and so it needs to have equal pay. The figures are the way to get that out. That is another important element of discrimination that the hon. Gentleman never takes on board: he only ever talks about direct discrimination.

John Penrose: I intend to address both kinds of discrimination when we get the clause stand part debate.
The Minister said that such measures take companies by surprise because they discover things they did not know. How can she square that with the calculation of the implementation costs in the Governments impact assessment:
We have assumed that the salary/wage data needed to calculate and publish the companies gender pay gaps are already collected and available at least for businesses with 250 or more employees who are companies under the Companies Act 2006. We have also assumed data identifying each employees gender will be held?
The Government have assumed that all the necessary data to create a gender pay audit is already held in a readily accessible, easily identifiable form in a company, but she has just implied that companies do not know what is going on because data are not held in a convenient form and that the companies have not been able to see them. Either they are held in a convenient form or they are not. If they are not, the impact assessment will have overestimated the number of businesses that have the data.

Vera Baird: The hon. Gentleman is miles away from the point that I am trying to make. I said nothing whatever about such discrimination being unknown to business because the data were not available in an accessible form. Data might be available, but are they being looked at in a way that discloses pay gaps? Very often, that is not the case. If on the other hand he wants to argue that all indirect discrimination is wilfully brought about by businesses who have the data available and do not put right a problem they know about, that is up to him, but I would have thought that that was quite a long way to go. I was simply trying to be fair and to say that I am rather anxious that we should not assume, as he did a minute ago, that all businesses are deliberately getting it wrong.
The impact assessment has been properly done and carefully evaluated and it is correct. None the less, the principle remains. One can take examples from the numerous local authorities that got tied down in the whole single status argument that has been going on for years. Many of them did not know that they were discriminating against particular groups of women, as opposed to particular groups of men, because they have never had to look at the respective pay that was being given. The only way anyone is able to do that is if they know about it. If they also declare in a way that is compatible with the next local authority, they can compare like with like and see why they are in a different position. There is no clash between what I just said and the impact assessment.
We need information, and we need it to be disclosed by the public sector and by the private sector in a way that makes it directly comparable, business with business, sector by sector, so that we can see where the deficits are. The hon. Gentleman is right to say that a number of businesses already disclose informationwe accept that completely and are pleased about it. On that bedrock of people who already do, we shall build, engaging them in the group that the commission will manage in order to come to the appropriate measurements, but also because they will be undoubtedly the first ones to declare under the new metrics what they have already been declaring under the old metrics. They will form the platform from which we can all look at the people who are not disclosing their metrics or who are disclosing them in some way that makes them less identifiable.

Sandra Osborne: If there are companies who are disclosing, they are the good guys, but what about those people who currently do not disclose? What makes the Minister think that they will do so voluntarily? What is the justification for waiting for another four years before making it compulsory, given that so many companies do not bother?

Vera Baird: The basis on which we think that it will work is that once one has the metricsI shall come in a minute to setting the system up, which should produce metrics that both sides of industry can agree quicklythe material will have to be made available publicly. It will have to be made available in an accessible form, and it will compare business A, business B and business C. Disclosure now tends to be madeI am not criticisingin a way that is not directly comparable. One might have bank A disclosing all the material that one needs to know, but bank B disclosing it in a different way. One would need to be enough of an insider in bank A and bank B to be able to compare. The stuff has to be the same, so that the employee or the trade union can see where the problems are. If bank A is already disclosing the stuff, and bank C is already disclosing the stuff, any sensible customer, any sensible investor and, overwhelmingly, any woman in her right mind is not going to go for a job with a business that is deliberately not disclosing the fact that it must have a pay gap. If it does not have a pay gap, it would disclose the information.

Lynne Featherstone: Could there not be a perverse incentive there? One of the reasons for us all wanting exposure of all the information around pay is that our suspicion is that those who do not disclose it are underpaying women. Therefore, they might be able to offer goods more cheaply. Is that not the argument that business is makingThis is a cost to business. We wont do it and therefore, by discriminating, were able to keep our costs down?

Vera Baird: It will not be five minutes before some bold trade union notices bank B in that non-disclosure position and has a good look at what is going on in the interstices of the pay structure. Transparency is the key, it really is. It is not something that is soft and waffly that will take ages to implement, instead of which we should be hitting business now with a big poleaxe. We are suggesting a sensible way forward, and therefore we favour clause 73 over the proposals in new clause 23 and amendment 248.
The new clause would set out in the Bill details of the gender pay gap information that employers should publish periodically. It would enablespecifically provide forsuch information to be used as evidence of a breach of an equality rule or clause, where that case can be made. The clause obviously also has penalties for a failure to publish designated information. Further, it would effectively require a gender pay audit as a precursor to publication, but does not really provide any flexibility in how to go about that.
Although the Government agree with some of the rationale behind the new clause, we are not calling for pay audits in the Bill. There are a number of other significant problems with the new clause. First, it jumps the gun on our proposal, which I am pleased is now accepted by all parties. The Equality and Human Rights Commission and representatives from business and unions are already engaged in the exercise of identifying what measurements and what gender pay gap information employers with at least 250 staffI will come to that in a minutewill be encouraged to report on, on a voluntary basis.
I am pleased that following its evidence, the CBIthe Committee will recall its representativeindicated that it would encourage the reporting once the measurements have been fixed up. It is engaged in the process now. They have all come together in this way. Later this summer, we look forward to consulting on the options that they have proposedin fact, they will consultbefore they make the recommendations, which will be before the end of the year. Therefore, it is a short-term exercise, and what we should get in the end is material that everyone agrees should come out, and that we will not end up forcing on unwilling people.

John Penrose: To pick up on the point about the CBIs comments in our evidence session a couple of weeks ago, I gained the impression that when the Minister asked the question of the lady from the CBI, she said that it was willing to engage with the Government if the clause went through on the ground that, I suspect, it would rather be inside the tent and participating, rather than having it done to them. I did not take the lady from the CBIin fact, other comments made outside the evidence session support thisto be saying that the CBI supports the principle of these gender pay audits in quite the broad way that the Minister perhaps inferred.
I want to make that clear, as the Minister rightly picked up other members of the Committee on earlier clauses when they quoted external stakeholder bodies and inferred their support for a particular point of view when the stakeholder bodies might not have agreed.

Vera Baird: I am not sure that I follow the point. The CBI representative said clearly that if the provisions are introduced she will encourage her membership to abide by them. I was immensely cheered by that, although I am not surprised by it: there are a lot of ways in which the CBI is well ahead of the Tory party on this matter. A number of really modern employers do not adhere, in the way that the hon. Gentlemans abysmal Back-Benchers did on Second Reading, to the anti-equality, Lets go so, so, so, so softly approach because equality is the opposite of business progress. That is simply not the case.
Many businesses in the CBI are perfectly capable of understanding that business progress and equality go togetherthey are not the enemies of one another. We are trying to harness that understanding, which modern businesses have, in setting them up with the unions and the commission to put together absolutely agreeable metrics. I am sure that they will have to argue the toss about what the metrics are. I am sure that the two sides will exhibit their natural instincts to protect their own interests, or that of their members. None the less, they are all willing and ready to do it. Indeed, they are even waiting, as the hon. Gentleman suggested, for the measure to pass. They are already going about the business of doing it and I am very pleased.
There is no question of waiting four years, although I know exactly what my hon. Friend the Member for Ayr, Carrick and Cumnock meant about the lack of compulsion for four years. However, we are not waiting four years until we start along the road of getting that material out. The commission will report, I think annually, about progress. It will be saying what the metrics are, how many businesses in all the sectors have produced the metrics and what the metrics are starting to disclose. It will also map what progress the transparency is making towards equal pay. It is a process that starts now, and if it has not finished in four years, there will be more to say and do.

John Penrose: To be clear, I share the Ministers view that the CBI agrees that equality is good for business, and my party would also share that view in many respects, but I want to be absolutely clear that the CBIs participation in the Governments consultation does not necessarily mean that it likes the fundamental idea of clause 73. In fact, the brief that it circulated states:
The CBI does not support clause 73 of the Bill.
It may be trying to mitigate the damage by participating should the clause go through, but let us be clear about the principle: the CBI does not like it.

Vera Baird: It is puzzling to know why the CBI does not like the clause, if that is its true position. I asked the representative of the CBI in the evidence session:
Will the CBI take responsibility once the metrics are worked out with the rest of it for driving the requirement through its membership to comply with disclosing those metrics?
Ms Hall said:
We would absolutely encourage our employers to use it if we come up with a system that works... I have to be equally clear that we do not support a legislative solution.[Official Report, Equality Public Bill Committee, 9 June 2009; c. 94, Q175.]
I asked her clearly, Will you help encourage? I used the word encourage. She said that she would drive it through her membership. What does the Tory party have against that?

John Penrose: The Minister has just proved my point. The question that she asked was, Will you be encouraging your members to obey or disobey the law, and the CBI rightly said, We will be encouraging them to obey it. It went on to say, And we do not agree with a legislative solution. I think that we are saying the same thing. I just want to ensure for the record that everyone is clear about where the CBI stands.

Vera Baird: I think that we are saying absolutely opposite things. I am saying that the CBI, unlike the Tory party, is happy to support driving the metrics, once they are fixedthat is what the lady from the CBI said; it is very interesting and I am most grateful to have been given that quotethrough its membership. That is as strong as anyone could wish it and this is not a question whether Ms Hall will encourage people not to break the law.
My hon. Friend the Member for Ayr, Carrick and Cumnock has just made it clear that it is not the law that the information has to be disclosed and it will not be for years. The CBI was saying that it will drive voluntary compliance through its membership once the metrics are fixed. Ms Hall is saying that she would prefer it to be voluntary from start to finish and there not to be set out in clause 73 the ability for a Minister to in due course require compliance. That is what she is saying about the legislation. She is not saying that she does not agree with all this, although it seems as though the CBI is well ahead of the Tory party in that position, which is a shame, bearing in mind the protestations that have been made latterly about how much the Tory party is on board with equal paynot for very long, it seems.
Anyway, let me move on and say that the consultation process that we shall go through is a major reason for the Governments decision to make the clause as flexible as possible as to what information may be required from 2013, as we need to see how the voluntary arrangements work in practice and whether refinements for any 2013 legislative regime may be required.
New clause 23, tabled by the hon. Member for Hornsey and Wood Green, would bypass the voluntary regime by requiring designated employers to comply with the information publication requirements within 12 months. We prefer our commitment to working with willing stakeholders to come up with a system that is as workable as possible for them. It would be wrong to prejudge our discussions, as the new clause would do. It talks of consultation with the Equality and Human Rights Commission, but that is on supplementary regulations, not the main reporting principles in the Bill.
Make no mistake: I share the frustration at the lack of progress in closing the pay gap, but bypassing what looks like a process to which all parties are committed and having mandatory arrangements in force by 2011 would run the risk of riding roughshod over the legitimate voice of both sides of the business community. Progress can better be made by bringing employers with usby including, encouraging and cajoling, rather than compelling. We now have the commitment to drive through, which I am very pleased about.
If that does not work, clause 73 is there. That is what the CBI does not want and it is all the CBI does not want. I do not know why the Tories are trying to pretend that somehow the CBI is opposed to equal pay, because it is not, on the evidence that we saw. Anyway, that is where the Tories are and that is where we are on this issue. Happily, the CBI is standing right behind me on this occasionand we are not even in a queue. If it does not work

John Penrose: Will the Minister give way?

Vera Baird: I shall finish my sentence, then I will. In 2013, if this has not worked, make no mistake: we will use clause 73.

John Penrose: I want to clarify the point by asking the Minister to point to any part of my remarks in which I said that the CBI is opposed to equal pay.

Vera Baird: The hon. Gentleman said that the CBI is against the legislative provision on this. He suggested that it was saying that it would drive this through its membership only in order not to advise its members to break the law. He knows that that is risible, because the provision does not say that employers must disclose the information. It says that if they do not, in due course they will be made to. However, at the moment it is not about driving the membership to avoid breaking the law. It is about willingness to help with trying to reach an amicable solution. We have a fundamental distinction of principle between the Government stance and the Tory stance, as disclosed in recent interventions. It was fairly clear on Second Reading where the old Tory party was coming from.
I am not sure whether it is intentional that the Liberal Democrat new clause would also apply to the public sector. Technically, it would, and in a similarly unhelpful way it would cut across the specific public sector equality duty consultation that we have just launched. One of the duties that we propose is a duty on public authorities with 150 or more employees to publish the gender pay gap in their organisation.
Another flaw in new clause 23at this point, I want to wrap it up with amendment 248, which would lower the boundary of 250 employees to 100is the fact that it would apply to employers with 101 or more employees. We do not want to prejudice the work of the Equality and Human Rights Commission in drawing up proposals for what gender pay gap information could be published, but providing gender pay gap information as required by the new clause would be a significant burden on business. Subsection (4) seems to allow for yet further information, besides what is specified in subsection (3), to be published.
There is nothing to prevent employers with fewer than 250 employees from reporting on their gender pay gaps, and we hope that by starting there we shall none the less encourage the same effect among smaller businesses, but we do not want to impose that burden on them yet. We think, as I shall explain, that 250 is the right threshold.

Lynne Featherstone: I believe that the Minister has said previously that the minute a figure is mentioned26 weeks or 250 employeespeople who are not brought within it think that the legislation disregards them. It would be honourable for employers with fewer than that number of employees to provide the information voluntarily, but the likelihood is that bad employers will not do so unless it is compulsory.

Vera Baird: I do not entirely share what the hon. Member for Weston-super-Mare might characterise as an approach suggesting that business will get away with all it can unless it is under compulsion to do something else. I see some large and small businesses already disclosing information; that is happening at all levels. We have tried, for reasons that I shall set out more specifically in a minute or two, to pick the right level at which, ultimately, if we have to, we will impose a burden by law. That is not to say that we do not look to the good small businesses to give a lead by example to the less transparent small businesses.
It is not that we do not expect the impact from big business to drive through little business. Odd as it may be in the current hotbed of views about banks to characterise a bank as benevolent, quite honestly, some banks have very good employment policies. Procurement policies in some big businesses are, to be honest, stronger than the Governments and they drive equality through the small businesses that want to contract with them.
If we can get the ideas of transparency, disclosure and more equal pay into bigger businesses, we expect that in turn to be usable as leverage on small businesses, because it is clearly another thing that employers will look at when considering how responsible they are being.
However, even with the threshold at 250, the power in clause 73 covers 40 per cent. of the people working in the private sector. That is our information. We picked that level because we believe that it is when private sector employers are likely to have the necessary IT infrastructure to collate and publish the categories of gender pay gap information with minimal additional burden. It is also worth noting that we do not plan to place requirements on even public sector employers with such a low head count, as the duty in the public sector bites at 150.
A further concern with new clause 23 is that the information required to be published could lead to individual employees pay details being identified if there were only one or two men or women in each row in the organisation. I imagine that hon. Members can see my point: the smaller the business, the fewer there are in each category, so the closer we get to disclosing Mrs. Smiths pay, which is probably undesirable.
On the question of the use to which information published under the proposed new clause could be put, subsection (8) presumes that an equality clause should apply in equal pay proceedings when there is a difference in average pay between women and men doing relevant types of work, which could be rebutted only by evidence that a material factor defence applied. In other words, the new clause would enable the published figures to be used as a key plank of any equal pay claim that might be brought against the employer. That would seem to be the case irrespective of whether the difference was material or statistically completely insignificant. The new clause would enable an individual female claimant, for example, to use figures that showed that women in similar jobs were in general paid more by her employer than men in support of a claim that she is being paid less than a man.
That point demonstrates well how difficult it is to get the balance right between the level of disclosure and the consequences of that disclosure for employers and employees. That is why our approach of learning from the voluntary regime and people on the front line will operate from 2010. We want to create a situation in which employers look at their pay arrangements and equalise them as far as possible without any recourse to litigation. All that the new clause would do is invite proceedings. One can be fairly sureI do not know why I am supposed to say thisthat there will be lawyers looking at the published figures, seeking to target employers who look vulnerable.

Lynne Featherstone: I thank the Minister for that. We are all moving in the same direction. The point is not to defeat the Government; they have moved a long way on equality matters. My fear is that this Government might not be in place for ever and that some of their measures might never come into being. I hope that she is right in her faith and belief that a voluntary regime will somehow lead the way.
One difference between us is timing. I will be brief, as we can deal with timing in the clause stand part debate. Our new clause is supported by all the womens organisations and the unions. I take my lead from them. They have been fighting the issues for years and years. The Minister is supported by the CBI. I say no more than that.
In terms of the metrics, I am concerned that we are leaving something up in the air for the welcome discussion this summer. Maybe we can have a discussion about metrics later, but my fear is that everyone will be pleased to sign up to something that does not exist in the hope that the force behind it will never come. There are also issues related to the measurability of the metric. As I understand it, one of the arguments against it involves the volume of information that would be published were the pay audits mandatory. It would be easier for the overseeing body, which may be the EHCR, to measure a single metric around which one could look between company and between employer and not have to go through all the information. My fear is that, like targets, it will become the single focus around which people will put in effort.

Vera Baird: We are not looking for a single figure. It will need to be more complex than that. Surely the hon. Lady can see that by phrasing clause 73 as we have we have left open a wide margin for the parties. It is not only the CBI that is prepared to engage in the task. Obviously, the TUC is with us as well on this endeavour. We want to leave as wide a margin as possible, so that the parties can agree the best metrics. Then, of course, the advantage we have over her proposal is that they will all agree to it and get on with it, and we do not have to start litigating, litigating, litigating. I say that immensely to my own disadvantage since I am a lawyer.

Lynne Featherstone: I understand where the Minister is coming from, and there is progress with encouragement from the Government. However, when parties are left to their own devices and there are voluntary arrangements, the pay gap takes so long to narrow that I am compelled to think that we have to move to something stronger.

Evan Harris: My hon. Friend makes the important point that hon. Members from other parties would also feel frustratedas I think the Minister wouldabout the time taken. The Ministers point that lawyers would be hovering around the arrangements proposed by new clause 23 is the incentive that business and employers need to engage in a meaningful attempt finally to take action to reduce that part of the pay gap which is due to direct discrimination. It is important to recognise that this is not a lone attempt to come up with a new approach. It is something that we have been encouraged to table by organisations that are in direct contact with women and specialists in this area. That is why I encourage my hon. Friend in the approach that she is taking.

Lynne Featherstone: I thank my hon. Friend for that and obviously I totally agree. It is that frustration that drives me to say that I am not completely happy with the response. I do not feel that it will make the necessary difference. At an appropriate moment, I would seek the Committees view on new clause 23. However, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

John Penrose: I beg to move amendment 14, in clause 73, page 55, line 19, at end insert
( ) the Armed Forces;
( ) the Security Service, the Secret Intelligence Service or the Government Communications Headquarters;.

Joe Benton: With this we may discuss the following: amendment 13, in clause 73, page 55, line 20, leave out paragraph (b).
Government amendment 67.

John Penrose: In contrast to the rather grand issues of principle that we have been discussing up until now and will probably come back to in the clause stand part debate, these are fairly technical amendments and I hope we will not need to trouble the Committee with them for too long.
Amendment 14 seeks to exclude armed forces, security services and so on from the operation of the clause. I notice that the Minister has tabled something similar in amendment 67, although not identical, and I am sure she will explain why her amendment is superior. It sounds as though we are on the same track and we await her comments on the comparative merits of the two amendments.
Amendment 13 is a probing one, seeking to assess the Ministers intentions to apply the standards of the clause to the public sector. At the moment, it is excluded. I presume that she intends to apply the same standards through the public sector equality duty, but we want her comments on the record. Will she point us to the part of the Bill that contains that or comment on how she intends to apply them, via the public sector equality duty, elsewhere in the Bill? That would be tremendously helpful.

Vera Baird: The combined effects of amendments 13 and 14 would be to apply clause 73 to all employers, including the public sector250 or more employersother than the armed forces and security and intelligence services. However, there are good reasons why clause 73 does not apply to the public sector. The gender pay gap is wider in the private sector, where 80 per cent. of employees work. We have less detailed information on the private sector than on the public sector. The public sector will be provided for under clause 147, which contains a lower threshold than clause 73. Our detailed proposals are in the consultation documents, the closing date for which is September 2009.
Clause 73(2)(b) would ensure that the clause does not apply to public authorities that are not subject to the public sector equality duty, but that schedule does not include the Security Service, the Secret Intelligence Service, the Government Communications Headquarters or any part of the armed forces assisting GCHQ. As drafted, subsection (2)(b) would bring those agencies, and that part of the armed forces, within the scope of clause 73, but that has never been our policy intention. Amendment 67 will correct that drafting oversight by making the position clear. On that basis, I think that the hon. Gentleman can withdraw his amendment.

Evan Harris: I am a bit confused about the purpose of the Government amendment. It would help if the Minister could clarify again the overall purpose. That would get to the heart of this group of amendments.

Vera Baird: I confess that I, too, got a bit confused in the middle of that response. I shall reiterate my point. We do not intend clause 73 to apply to public sector employees, for the reasons set out, and that would be the combined effect of amendments 13 and 14, even though that is not the issueI do not thinkthat they were intended to probe. Subsection (2)(b) would ensure that clause 73 does not apply to the public authorities in schedule 19 which are subject to the public sector equality duty. The schedule does not include the Security Service, the Secret Intelligence Service, GCHQ or the armed forces helping GCHQ, which means that subsection (2)(b), as drafted, would bring those agencies and that part of the armed forces within the scope of the clause, but that is not our policy intention. I am sorry that I was not clear enough before. Amendment 67 will remove them from the scope of the clause.

Evan Harris: The Minister has made herself very clear. However, we are concerned that clause 73(2)(b) exists at all. There is no harm in having both the public sector equality duty and the tougher clause 73 requirementswe do not think that those go far enough, as we know from the debate on the previous group of amendments. Is she certain that there are not public sector organisations where the gender pay gap is just as wide and that an even tougher action than the public sector equality duty, which is an important, but slow boat, would not be best applied in those areas? It seems unfortunate to disapply the public sector, given that, if it met it, everything would be fine anyway.

Vera Baird: I hope that for the benefit of the amendments the position is now reasonably clear.
We are not being soft on the public sectorquite the reverse. Through clause 147, to which we shall come presently, we will require public authorities

The Chairman adjourned the Committee without Question put (Standing Order No. 88)

Adjourned till this day at Four oclock.